Tag: concern

The Chinese economy is a bigger worry right now than the U.S. economy, according to an investments expert at a private bank. Still, he ultimately expressed optimism that China’s leaders will keep their economy together. “The Chinese economy is, at the moment, a bigger cause of concern right now compared to the U.S. economy,” Brill told CNBC’s “Squawk Box.” Adding the tariff battle between the two largest economies just means growth will be “a bit more difficult” for Beijing, he noted. “This is s

The Chinese economy is a bigger worry right now than the U.S. economy, according to an investments expert at a private bank.

Speaking to CNBC on Friday, Felix Brill, the head of investment solutions at Liechtenstein-based VP Bank, said investors should expect more market volatility due to the ongoing trade war negotiations between Washington and Beijing. Still, he ultimately expressed optimism that China’s leaders will keep their economy together.

“The Chinese economy is, at the moment, a bigger cause of concern right now compared to the U.S. economy,” Brill told CNBC’s “Squawk Box.”

He added that there are “clear signs” that China’s economy is slowing in the short term, and there may be more dragging on the nation as it looks to transition its economic model from one led by exportation to a more consumption-driven approach. Adding the tariff battle between the two largest economies just means growth will be “a bit more difficult” for Beijing, he noted.

But, Brill said, that doesn’t mean China won’t be able to push through those challenges.

“This is some cause for concern in the short term, but I’m confident that the Chinese authorities, again, will step in and implement additional measures to support the economy,” he said.

Larry Kudlow, President Trump’s economic adviser, suggested on Friday that China was stealing intellectual property and trade secrets from Apple, which may be contributing to the iPhone maker’s financial challenges in the country. However, he hedged a bit: “I don’t want to surmise too much here, but Apple technology may have been picked off by China and now China is becoming very competitive with Apple,” Kudlow said. Because China is clearly taking Apple’s IP and trade secrets and that fact is m

Larry Kudlow, President Trump’s economic adviser, suggested on Friday that China was stealing intellectual property and trade secrets from Apple, which may be contributing to the iPhone maker’s financial challenges in the country.

However, he hedged a bit: “I don’t want to surmise too much here, but Apple technology may have been picked off by China and now China is becoming very competitive with Apple,” Kudlow said.

That was diplomatic of him. Because China is clearly taking Apple’s IP and trade secrets and that fact is most certainly damaging the company’s business.

This isn’t a new problem, and companies know that, to some degree, it’s the price of doing business in the world’s second-biggest economy. Apple is at particular risk because of its large exposure to China and because of the country’s increasingly sophisticated manufacturing sector. Last year, China’s Huawei surpassed Apple in shipments of smartphones.

U.S. intelligence agencies and the Justice Department have laid out a long list of the types of concerted hacking and spying campaigns used by China to steal the IP of U.S. tech companies. China and its companies have strongly denied most of these claims over the years, making it hard for U.S. companies to take action. For example, a former Apple engineer was arrested in 2018 and charged with stealing self-driving car secrets. The engineer has denied the claims and pleaded not guilty in a California court.

Fresh misconduct allegations brought by Tokyo prosecutors against ousted Nissan Chairman Carlos Ghosn center on the use of company funds to pay a Saudi businessman who is believed to have helped him out of financial difficulties, two company sources with knowledge of the matter said. Prosecutors arrested Ghosn for a third time on Friday, accusing him of aggravated breach of trust in transferring personal investment losses to the automaker. “By doing so, (Ghosn) behaved in a way that breached tru

Fresh misconduct allegations brought by Tokyo prosecutors against ousted Nissan Chairman Carlos Ghosn center on the use of company funds to pay a Saudi businessman who is believed to have helped him out of financial difficulties, two company sources with knowledge of the matter said.

Prosecutors arrested Ghosn for a third time on Friday, accusing him of aggravated breach of trust in transferring personal investment losses to the automaker.

The prosecutors’ statement said they believe that around October 2008, Ghosn was trying to deal with losses on paper of 1.85 billion yen ($16.6 million) incurred on a swap contract he had with a bank which it did not name.

A person helped arrange a letter of credit for Ghosn and a company run by the person later received $14.7 million in Nissan funds in four installments between 2009 and 2012, the statement said, adding that the payments were made in Ghosn’s and the person’s interests.

“By doing so, (Ghosn) behaved in a way that breached trust, and inflicted damage on the property of Nissan,” the statement said. The statement also said Ghosn had earlier sought to have Nissan shoulder the appraisal losses directly.

According to the Nissan sources who have knowledge of the company’s probe into its former chief, the person who helped Ghosn is Khaled Al-Juffali, vice chairman of one of Saudi Arabia’s largest conglomerates, E. A. Juffali and Brothers, and a member of the board at the Saudi Arabian Monetary Authority.

He is also majority owner of a company called Al-Dahana which owns half of a regional joint venture called Nissan Gulf with the other half held by a wholly owned unit of Nissan Motor.

Sheikh Khaled Juffali has no comment on this subject, according to an emailed statement from E. A. Juffali and Brothers.

Ghosn’s Tokyo-based lawyer, Motonari Otsuru, was unavailable for comment on this article, according to a person who answered the phone at his law office. A representative for the Ghosn family declined to comment.

Other media have said Ghosn has through a lawyer denied that he shifted losses to Nissan and has told investigators that the four payments were for legitimate business purposes, including a reward for handling problems at Nissan dealers in Saudi Arabia.

Tokyo prosecutors declined to comment. Asked about Ghosn’s reported comments, a Nissan spokesman said: “We cannot comment on matters related to Ghosn’s arrest for breach of trust. Nissan’s own investigation is ongoing, and its scope continues to broaden.”

One industry analyst has sounded the alarm on Facebook, calling the company the “biggest concern” among the so-called FAANG stocks. The FAANG stocks consist of Silicon Valley tech giants Facebook, Amazon, Apple, Netflix and Google-parent Alphabet. The Times report came on the back of a series of scandals and incidents which have mired Facebook in controversy and sent its stock sinking in 2018. As of its last close after extended hours trade on Dec. 21, the company’s stock price was more than 40

Wang said many of Facebook’s trust woes have been “centralized” around Chief Operating Officer Sheryl Sandberg, who was in the spotlight after a New York Times report in mid-November about the executive and the social media company’s internal operations.

The Times report came on the back of a series of scandals and incidents which have mired Facebook in controversy and sent its stock sinking in 2018. As of its last close after extended hours trade on Dec. 21, the company’s stock price was more than 40 percent off its 52-week high.

Asked about the possibility of Sandberg departing from Facebook, Wang said it was “in the rumor category.”

“I think there needs to be some kind of management change or some appointment that’s someone that the market trusts to take care of these issues and to address privacy and cybersecurity in a stronger fashion than what’s being done today,” he said.

Russia has less appetite for oil supply cuts than Saudi Arabia: Expert 4:38 AM ET Tue, 4 Dec 2018 | 06:04The risk of U.S. legal action against OPEC could prompt more members of the influential oil cartel to sever ties with the group, according to the head of energy markets research at Barclays. Washington is reportedly considering legal claims against OPEC for allegedly manipulating the energy market. If passed, the proposed No Oil Producing and Exporting Cartels Act — more commonly referred to

If passed, the proposed No Oil Producing and Exporting Cartels Act — more commonly referred to as NOPEC — could revoke the sovereign immunity that has long shielded members of the Middle East-dominated group from U.S. legal action.

Sky pays $761 million for broadcast rights to English Football League — but clubs want more 10 Hours Ago | 02:27Soccer clubs from England’s Championship, the league immediately below the Premier League, have expressed “grave concerns” about how the English Football League (EFL) renegotiated a new multi-million pound TV deal with British broadcast partner Sky. In contrast, the Premier League domestic rights due to begin next season between Sky and BT Sport is worth £4.55 billion, with a further p

Sky pays $761 million for broadcast rights to English Football League — but clubs want more 10 Hours Ago | 02:27

Soccer clubs from England’s Championship, the league immediately below the Premier League, have expressed “grave concerns” about how the English Football League (EFL) renegotiated a new multi-million pound TV deal with British broadcast partner Sky.

Despite a 35 percent increase on the previous deal, the £595 million ($761 million) agreement which is due to kick in from the start of next season and run until 2024 has not been well received by the majority of clubs.

In contrast, the Premier League domestic rights due to begin next season between Sky and BT Sport is worth £4.55 billion, with a further package sold to Amazon for an undisclosed amount.

The terms of the new EFL deal were announced on Monday, leading to a meeting being between club officials the following day. Those attending were thought to include; former European Cup winner Aston Villa, three-time English champion Leeds United and Derby County, who is currently managed by former Chelsea and England midfielder Frank Lampard.

There then followed a statement, from “several unnamed clubs,” in which said they felt they had been “ignored.”

It read, “Championship clubs are gravely concerned that the EFL Board has announced it has approved a new long-term domestic broadcasting rights deal.”

Earlier in the week the EFL had agreed that these negotiations had not been without issue, but that they still offered clubs financial security.

Thirty-five percent of CFOs surveyed in Q4 cited trade as their biggest current concern, making it the top issue in the fourth quarters. 1 concern of CFOs in Q3, and fell off by a considerable percentage as CFO concerns about trade hit their highest quarterly mark in 2018. The percentage of CFOs citing central bank policy as their biggest concern increased slightly, from 10 percent to 13.5 percent, but near-60 percent of CFOs expect the Federal Reserve to raise rates again in December. (Note: Th

Concerns about a slowing economy — Goldman Sachs said on Monday in a report that U.S. economic growth could be cut in half by the end of next year as the tax cuts wear off and rates rise — and worries about another round of tariffs against China set for January in the ongoing trade war are weighing on the corporate outlook.

Thirty-five percent of CFOs surveyed in Q4 cited trade as their biggest current concern, making it the top issue in the fourth quarters.

CFOs were also asked their opinion of major political figures in Washington, and President Trump’s hardline trade advisors, Peter Navarro and Robert Lighthizer, had by far the lowest approval ratings among CFOs, at 26.7 percent. Last week, as stocks suffered another steep selloff, the White House was sending mixed messages on trade, with President Donald Trump’s top economic advisor, Larry Kudlow, disavowing comments from White House trade advisor Peter Navarro, who last week lashed out at Wall Street influence in U.S.-China trade negotiations in comments that helped weaken the stock market.

The stock decline on Monday came after a Sunday speech by Vice President Mike Pence saying there would be no end to U.S. charges on $250 billion worth of Chinese goods unless Beijing changed its ways.

Consumer demand was the second biggest risk cited by CFOs, at 24 percent. But it had been the No. 1 concern of CFOs in Q3, and fell off by a considerable percentage as CFO concerns about trade hit their highest quarterly mark in 2018. The percentage of CFOs citing central bank policy as their biggest concern increased slightly, from 10 percent to 13.5 percent, but near-60 percent of CFOs expect the Federal Reserve to raise rates again in December.

While the market volatility is clearly weighing on CFOs, and the political headlines continue to increase uncertainty, CFOs were still mostly positive on the global macroeconomic conditions in Q4, with every region around the globe being rated as “stable.” The United States, in particular, was the only region described as “improving,” which is a tag the U.S. has received from CFOs taking the survey for eight quarters in a row.

(Note: The CNBC Global CFO Council Survey for the fourth quarter was conducted from Nov. 13–19, 2018. Thirty-seven of the 121 global members responded to the survey, including 15 North America members, 13 EMEA members and 9 APAC members.)

Investor Kevin O’Leary doesn’t think the market correction is over and he’s taking his signal from the bond market, he told CNBC on Monday. He said the bond traders who take duration risk “should be the smartest guys in the world” and they aren’t worried. “Until the bond guys get worried and the bond lady sings, this correction isn’t over,” O’Leary said. Recently there were double-digit earnings and good price-earnings, or P/E, ratios, because of the good environment and low inflation, Doll expl

Investor Kevin O’Leary doesn’t think the market correction is over and he’s taking his signal from the bond market, he told CNBC on Monday.

O’Leary, chairman of O’Shares ETF and co-host of “Shark Tank,” said he’s specifically looking at the credit markets and the large-cap companies that have debt “up their balance sheets.” Many of those issuances are coming due in the next 24 months.

“If you really thought that they couldn’t pay it back you would have a blowout in the credit markets. And they have barely moved,” he said on “Closing Bell.”

He said the bond traders who take duration risk “should be the smartest guys in the world” and they aren’t worried.

U.S. equities ended lower on Monday, giving up sharp gains from earlier in the day. The Dow Jones Industrial Average closed down 245.39 points at 24,442.92, erasing a 352-point gain. The blue-chip index was down 566 points at the lows of the day and briefly dipped into correction territory before coming back shortly before the close.

O’Leary said he is looking for bond yields to jump about 200 basis points. That would then show concern, and it would be a signal to buy both credit and equities, he said.

Bob Doll, chief equity strategist at Nuveen Asset Management, said the fundamentals are in flux and that creates uncertainty and volatility.

Recently there were double-digit earnings and good price-earnings, or P/E, ratios, because of the good environment and low inflation, Doll explained.

Now, inflation and interest rates have moved up a bit and that has sparked some concern that the Federal Reserve may go too far in raising interest rates, he said. Therefore, P/Es have to come down.

On the earnings side, there’s a view now that earnings aren’t going to grow at double digits forever.

“The economy is still good, but it is slowing, and how slow we’re going to get is a concern,” Doll told “Closing Bell.”

“It’s a resetting, and that creates all kinds of volatility, and volatility tends to beget volatility,” he added, noting that there is a lot of money being managed on a momentum basis.

In the case of France, the 2019 budget plan sees its structural deficit (the difference between spending and revenues, excluding one-off items) falling 0.1 percent this year and 0.3 percent in 2019. Though the tone of the warning from Brussels to Paris was softer than the tone towards Rome, the two countries have perhaps more similarities than differences. Italy has also been criticized for having very upbeat economic forecasts in its 2019 budget plan. Data from the European statistics agency, E

Markets have been on the edge regarding Italy’s future spending, but there are other countries challenging European fiscal rules.

France, the second-largest economy in Europe, received a letter from Brussels last week, warning that its planned debt reduction in 2019 does not respect the proposals that Paris had agreed previously with the EU. Spain, Belgium, Portugal and Slovenia were also effectively told off by the EU.

In the case of France, the 2019 budget plan sees its structural deficit (the difference between spending and revenues, excluding one-off items) falling 0.1 percent this year and 0.3 percent in 2019. Paris had agreed in April to an annual reduction of 0.6 percent of GDP (gross domestic product) for its structural deficit.

Though the tone of the warning from Brussels to Paris was softer than the tone towards Rome, the two countries have perhaps more similarities than differences.

The French 2019 budget “shows that the government relies heavily on very optimistic revenues to achieve fiscal consolidation and that spending is out of control again,” Daniel Lacalle, chief economist and investment officer at Tressis Gestion, told CNBC via email.

Italy has also been criticized for having very upbeat economic forecasts in its 2019 budget plan.

“In the case of France, it is a very difficult budget to accept by the European Commission because France has not had a balanced budget since 1974 and has missed its own deficit targets more than eleven times,” Lacalle added.

Data from the European statistics agency, Eurostat, shows that since it started collecting French data in 1978, France has never registered a budget surplus. Italy, which has provided data since 1995, has also never presented a budget surplus.

On Wednesday, Morgan Stanley warned about China exposure and cut earnings estimates for GM, Ford and Fiat Chrysler. Morgan analysts said they remained cautious on autos and were trimming forecasts and price targets after weak third-quarter China auto shipments data. “We forecast GM China JV affiliate income to fall nearly 30% YoY in 3Q18 from record highs. We forecast GM China JV profit to fall a further 30% in 2019 vs. 2018,” they wrote. “We now assume Ford China JV affiliate income is negative

As third-quarter reporting season approaches for automakers and suppliers, analysts have been shaving earnings forecasts for a group that has already been slammed by profit worries and trade war concerns.

Morgan analysts said they remained cautious on autos and were trimming forecasts and price targets after weak third-quarter China auto shipments data. The firm’s analysts warned that the Chinese government stimulus in the next year may be the biggest driver of earnings and stock prices in the next six to 12 months.

Overall trade worries also continue to weigh on the group. On Tuesday, Goldman Sachs economists said there remains a 35 percent chance that global auto tariffs could be imposed on the sector, and a Commerce department recommendation for tariffs is expected at some point after the midterm elections. The structure of the revised trade agreement with Mexico and Canada suggests the White House is considering higher auto tariffs.

Analysts have also been chiseling away at earnings forecasts for auto suppliers.

Wells Fargo on Wednesday took the knife to its forecast for auto parts EBITDA by 4 percent, with the biggest adjustments to Visteon, which slumped nearly 5 percent at one point, and Adient, also off sharply. For 2019, Wells analysts cut EBITDA by 3 percent and assumed almost flat global production at 1 percent.

However, Wells said that the median group multiple is now at a 5-year low and the stocks have discounted much of 2019 risk. Visteon and Adient would have the most earnings risk should China worsen.

GM is most exposed to China, and Morgan Stanley lowered its Q3 EPS to $1.10 from $1.16 per share. The analysts also lowered fiscal year 2018 by 3 percent to $5.46 per share and fiscal 2019 by 6 percent to $4.02 per share, a number it said is 30 percent below consensus.

“We forecast GM China JV affiliate income to fall nearly 30% YoY in 3Q18 from record highs. We forecast GM China JV profit to fall a further 30% in 2019 vs. 2018,” they wrote. They cut their target on GM to $43 from $46 per share.

As for Ford, Morgan said third-quarter China volume appears down 40 percent, and it lowered third-quarter earnings to $0.28 per share from $0.32. The analyst said they trimmed fiscal-year numbers by 4 percent to $1.22 per share, below the company’s guidance of $1.30 to $1.50. The firm chopped fiscal 2019 by 17 percent to $0.82 per share, noting its forecast is nearly 40 percent below consensus.

“We now assume Ford China JV affiliate income is negative in 2H18 and in 2019,” they wrote. They also lowered Ford Europe volume forecast to a 3 percent decline for the third quarter and a 6 percent decline for the fourth quarter.

They pared their Ford stock target to $14 from $15. Ford reports earnings next week, and GM reports the following week.

They did not cut the target for Fiat Chrysler stock, but lowered earnings estimates for the fiscal year by 1 percent and fiscal year 2019 by 2 percent. The analysts estimate Fiat Chrysler China venture sales volume was down 35 percent year over year.

B. Riley FBR analysts also wrote on auto suppliers, noting that some stocks have become attractive after a sharp sell-off, and they mention Gentex as a top pick. They said suppliers have been hit since late August when Continental AG cut guidance and industry performance in China and Europe became more challenging.

Car sales have also been weaker in the U.S. with Ford and GM both down double digits in September.

“… We see several compelling buying opportunities at these levels. Since August 21, we estimate that U.S. auto suppliers are down 11.2% vs. the S&P 500 up 2.2%. A string of unfavorable guidance revisions from major auto companies has compounded pressure on the group from uncertainty over the impact of global trade tension and lingering concerns about the sustainability of U.S. SAAR have likely been a headwind as well,” according to B. Riley. “We are revising 3Q18 estimates in accordance with mixed demand dynamics in certain regions, but we remain positive on particular secular growth themes in the auto space including auto tech adoption and vehicle lightweighting.”